Indian Supreme Court Orders Jet Airways Liquidation

MUMBAI: In a significant development for India's aviation sector, the Supreme Court has ordered the liquidation of Jet Airways, a once-prominent airline that has been in bankruptcy since 2019. This decision marks the end of a lengthy legal battle that has lasted for five years, following the airline's collapse under a staggering debt of $1.2 billion.

Jet Airways was once the second-largest airline in India, known for its full-service offerings. However, it ceased operations five years ago when it ran out of cash, leading to its planes being grounded. The situation escalated when lenders initiated bankruptcy proceedings against the airline in the same year. In a bid to resolve the crisis, a national company law tribunal had previously allowed the transfer of ownership to a consortium of buyers, which included UAE-based businessman Murari Lal Jalan.

Despite this move, concerns from lenders regarding the execution of the resolution process led to appeals in court. On Thursday, the Supreme Court of India overturned the ownership transfer, stating that the consortium had failed to meet the legal requirements necessary for a takeover. The court emphasized that allowing the buyout to proceed would be "perverse and unsustainable in law." Consequently, the court directed a bankruptcy court in Mumbai to initiate the "necessary formalities for commencement of liquidation," which will involve the sale of the airline's assets.

The Indian aviation sector is known for its fierce competition, and Jet Airways is not the only airline to face challenges. Several others have struggled due to a mix of poor management, excessive debt, and unfavorable market conditions. For instance, the budget airline Go First filed for bankruptcy protection last year, citing issues with "faulty" engines from US aerospace company Pratt & Whitney, which grounded a significant portion of its fleet. Similarly, Kingfisher Airlines, owned by beer tycoon Vijay Mallya, shut down in 2012 after failing to repay millions in loans to state-owned banks. Mallya has since fled India and is currently fighting extradition from London to face financial fraud charges.

The liquidation of Jet Airways serves as a stark reminder of the challenges faced by airlines in India and around the world. As the aviation industry continues to evolve, it is crucial for airlines to adopt sound management practices and maintain financial discipline to avoid similar fates. The future of air travel in India remains uncertain, but the lessons learned from Jet Airways' downfall may help shape a more sustainable aviation landscape in the years to come.